Online media advertising success in question, dealers say

April 22, 2008

By Karin Gelschus
Associate Editor
Most dealers agree the Internet is a growing marketing and sales presence in the industry, and more consumers than ever are researching products online before they even step foot in a dealership. However, according to a Powersports Business survey, there is disagreement about whether dealers see enough value in advertising on the Web.
The national survey, conducted by Irwin Broh & Associates, asked dealers if any portion of their advertising budgets are going toward online media. Of those, 54 percent said yes, and 46 percent said they are not.
On average, dealerships who are marketing online said they are using 20 percent of their total advertising budget on the Internet. Whether that number is paying off in terms of leads and sales is up for debate.
Jeffrey Smith, owner of Pioneer Motorcycles in Winchester, Tenn., says he spends at least 40 percent of his overall marketing budget toward online advertising, but the success rate of the advertising has been only average. Part of the problem, however, is it can be difficult to get an accurate measure of success.
“Any advertising is hard to track without specifically asking the customer every time,” he said, “but we do have hit counters and also track lead generations.”
Some dealers are reporting benefits from online advertising, including Don Roark, president of Shreveport Motorsports in Shreveport, La.
“I’ve pulled some money I was putting in other areas of my dealership,” he said, “and used it totally on this type of advertising because it’s done so well for us. ” Roark has a full-time Internet associate that monitors the dealership’s Web site and keeps it updated.
Regardless of its success, dealers are recognizing the inevitable increase in Internet use. Craig Tillen, owner of Tilleman Motor Co. of Havre, Mont., who dedicates about 25 percent of his marketing budget to online media, says dealers are always using the Internet and consumers are the same way.
“You’re seeing the consumer look online first vs. driving to the showroom first. The Internet is the future of retail,” he said. “Though we’re also a car dealership, so I think we’re a little ahead of the curve.”

Types of online advertising
Currently most dealerships are only using their Web sites as advertising tools online, but the survey revealed some are expanding marketing to other areas.
Roark of Shreveport Motorsports says his dealership has its Web site, but it also advertises through e-mail, Cycle Trader and eBay. Through those sources, he notes they promote both the dealership’s products and promotional events.
Like Roark, Smith of Pioneer Motorcycles advertises in other online areas in addition to his dealership’s Web site.
“We do Powersports Network, and we’re also connected through CycleTrader.com.,” he said, and adds the dealership mostly focuses on its product information with prices.
That’s the case for Tilleman Motor Co. as well. Tillen says they don’t do any event type advertising, it’s all about the dealership’s products. But the company is revamping its Web site so they can sell more of its used inventory and parts.
“We’ve been working on it for a couple months, and it’ll probably happen by May,” he noted.

Online budget increases?
While the average portion of a marketing budget going toward online media is currently 20 percent, some dealers say that number will most likely increase in the next year or two.
Owner John Broadman of John’s Performance Shop in Carey, Ohio, says about 30 percent of his advertising budget is for online media, but that number will increase by another 10 percent in the next year.
Some dealers continue to be leery of the potential benefits of online advertising, so they intend to keep their budgets the same, at least for now. This is true for Michaele Guarino of Kingsland Reach Marine in Richmond, Va. Her dealership’s current online advertising budget is more than half its total marketing budget.
Although Pioneer Motorcycles’ online advertising budget is not quite as high as Kingsland Reach Marine’s funds, Pioneer also plans to keep its budget about the same. Smith says since newspapers and radio did not produce the results he hoped for, he looked to TV. “If you did TV enough,” he said, “it would probably help, but it’s just not affordable.” Smith adds that because of prior ineffective advertising and only fair numbers from online marketing, he’s hesitant to spend any more money on Internet advertising.
Smith isn’t the only dealer struggling with what avenues to take and which ones to avoid. Dealers across the board say all of advertising is a speculation, regardless of whether it’s online.
Many dealers are still developing their own Web sites and not ready to utilize the Internet beyond that. Amongst the few dealers who are ready to utilize the Web further, some say, however, it’s too soon to rate the value of advertising online.
“You can try to guess those things, but at this point in advertising, it’s all theory,” said Roark of Shreveport Motorsports. “I said to myself, ‘I’m going to dedicate this amount of dollars (on online media) and get as much pull out as I can, and go from there.’ I wouldn’t say right now there’s a growing demand for [online advertising], but in the future there’s going to be.”